Investing with the Trend: A Rules-based Approach to Money Management

Part IMarket Fiction, Flaws, and Facts

Part I can best be described as the location for things I have learned over the past 40 years about the markets, about investors, and about investment philosophies. These involve many concepts and measurements of the markets that include fiction, flaws, and facts about the markets.

Part I is all about understanding the past and hopefully learning from it. As the old saying goes, “The present is never exactly like the past, but it certainly rhymes,” which is helpful to apply when studying the markets. In Part I my opinions are often included, sometimes they are adamant, other times they are merely subjective. I have come to believe strongly in what I say in this book, but also know that just because I believe it, does not always mean it is absolutely fact. I try to say that often so that I don’t offend everyone.

There is an old aviation saying, It is better to be on the ground wishing you were in the air, than in the air, wishing you were on the ground.

Mark Twain is credited with saying, It is not what you don’t know that will get you into trouble; it is what you know for sure that just ain’t so.

There are things in modern finance that are just plain wrong, more marketing than substance, and I try to dispel much of it in this section. There are many things in modern finance that just don’t measure up to their overhyped abilities. I try to point out many of them and offer examples where they are flawed.

1. Bull markets—Generally defined as ...